RSSA third-party payment processor has filed a motion in federal court asking a judge to dismiss a June 2016 Consumer Financial Protection Bureau lawsuit. In addition to other grounds for dismissal, Intercept Corporation claims the bureau is barred from pursuing the action because the relevant three-year statute of limitation has run. At stake is the extent of the bureau’s power to bring claims independently of other federal agencies.
The CFPB’s lawsuit alleges that the Fargo, N.D., company illegally enabled clients to make unauthorized withdrawals from consumer bank accounts. The CFPB complaint includes the now-familiar language of “unfair, deceptive and abusive practices (UDAAP)” drawn from the Dodd-Frank Act. Like many recent targets of CFPB lawsuits, Intercept is claiming that it is not a “covered person” under Dodd-Frank, that the CFPB’s complaint failed to spell out the elements of an unfairness claim, and that the agency’s structure violates the U.S. Constitution.
However, the element of Intercept’s motion that is drawing the most attention in the industry is the company’s claim that any CFPB action pursuant to its payment servicing is foreclosed by a previous investigation in which a federal agency declined to commence an enforcement action. According to Intercept, the Federal Trade Commission in 2012 challenged certain Intercept procedures “under an identical theory” but took no action. Intercept claims that the three-year statute of limitations began to run with the 2012 FTC investigation.
The government’s failure to press that claim, Intercept said, “precludes the bureau’s present effort to revisit that decision long after the [statutory] limitations period has run.” The government had its chance, according to Intercept, and it cannot be subject to multiple reviews from multiple agencies. “The bureau may disagree with the FTC’s original conclusion, but it has no right to attempt to overrule it long after the statute of limitations has expired,” Intercept said.
The CFPB has yet to formally respond to Intercept’s motion to dismiss. However, according to the company, CFPB attorneys have already made clear to Intercept that they do not consider the FTC’s action to affect them. According to Intercept, in negotiations prior to the lawsuit, the CFPB took the “shocking” position that, despite a three-year statute of limitations imposed on the agency by the Consumer Financial Protection Act, the bureau had the power to delay the start of that clock indefinitely until the CFPB Director personally concluded the statute had been violated.
